Knowledge Sourcing Strategies Research Articles

Searching wide and deep for business model innovation

ABSTRACT To remain competitive, firms must innovate their business models (BMs) to meet the demands of the external environment. Given the severity of external threats or opportunities, managers need to determine the scope of BM innovation (BMI) – how many elements of a BM need to be changed – and the degree of novelty required. However, internal firm knowledge may not be sufficient to conceive of and implement new BMIs. Seeking external knowledge can offer managers diverse perspectives and expertise that should foster BMI, a topic that has been insufficiently addressed in the literature. To address this gap, we investigate whether firms that engage in external knowledge search are more likely to engage in BMI and whether different external knowledge sourcing strategies are associated with different BMI types. Analysing Norwegian firm-level data, we find a close association between a firm’s choice of external knowledge search activity in terms of breadth and depth and the scope and novelty of a BMI. The wider a firm’s search, the wider its BMI scope, and the deeper that search, the more novel its BMI. Our findings contribute new, empirically supported insights on external knowledge search as an important antecedent to BMI. For practitioners, our findings illustrate how different search strategies help firms initiate and implement different types of BMI.

One size does not fit all: The plurality of knowledge sources for transition to sustainable farming

Sustainable farming encompasses diverse practices that draw on various knowledge stocks. This knowledge must be adapted to suit the farmers’ crops, the local environment and the farming system. To achieve this requires farmers to build on their knowledge and invest in acquiring knowledge from external sources. It should not be assumed that different farmers cultivating different crops adopt the same knowledge sourcing strategies. Therefore, the present paper conducts a crop level analysis to study the relationship between knowledge sourcing and innovation in sustainable farming practices, for different crop categories. We exploit a French Ministry of Agriculture cross-sectional dataset on farming practices in 2017 and run a multivariate probit regression and equality of means test. The results reveal that the importance of different knowledge sources is ranked differently by different growers cultivating different crops and adopting different practices. The findings show, also, that farmers use the same knowledge sources with the same intensity to diversify their crop types. These results have two implications. First, since knowledge is a primary driver of innovation, farmers must capitalise on their knowledge. Second, policies must be flexible and co-designed with farmers in order to support them and respond to their needs. In formulating policy, an account should be taken of differences in the knowledge sourcing strategies related to different crops to ensure a quick transition to sustainable farming.

Leveraging global recombinant capabilities for green technologies: the role of ethnic diversity in MNEs’ dynamics

The growing environmental pressure and the parallel policy push on eco-innovations are making the generation of green technologies more and more profitable, given the expansion of existing markets and the creation of new ones. MNEs may show a competitive advantage in this context because of their global knowledge sourcing strategies that increase heterogeneity and variety in firms’ innovation processes. We accordingly argue that the inventors’ teams involving higher ethnic diversity are more likely to successfully generate green inventions due to their idiosyncratic experiences and diversified knowledge bases. We rely on USPTO data from an ethnic patenting database covering US-based MNEs from 1980–2009. We find that R&D teams featured by higher levels of ethnic diversity among the US-based inventors correlate with a higher probability of green patenting, but the relationship follows a non-linear pattern. Also, ethnic diversity is found to moderate the effect of recombinant capabilities on the generation of new green technologies. Our results bring implications for the strategic management of inventors’ teams by multinationals willing to run the green patent race and policymakers facing the climate change challenges.

EXPLORATORY INNOVATION THROUGH GAINING KNOWLEDGE FROM ALLIANCE PORTFOLIO: INTERPLAY BETWEEN NETWORK STRUCTURE AND KNOWLEDGE COMPOSITION

Building an alliance portfolio is an important knowledge-sourcing strategy for firms to create exploratory innovation. By proposing a framework of knowledge flow and search flexibility, we examine the effects of a firm’s network position and knowledge composition of the alliance portfolio on the creation of exploratory innovation. Particularly, we explore their interactions that create synergy and offset mutual disadvantages. Using panel data of 142 pharmaceutical companies from 1996 to 2010, we find that central and brokering positions have an inverted U-shape relationship with the creation of exploratory innovation. We also find two combinations of network position and knowledge composition advantageous for increasing exploratory innovation: a central position with partners’ wide scope of new knowledge, and a brokering position with partners’ wide scope of shared knowledge. This study contributes to the literature by identifying interaction effects between social network theory and the knowledge-based view and suggests implications for designing a firm’s alliance strategy.

Fuels for Moving Forward and Staying Ahead: Effective Knowledge Sourcing Strategy for Leaders

This paper examines leading firms’ strategies in the strategic factor market for technological competition. We try to examine the effects of knowledge sourcing for leaders’ performance in competitions with followers. Particularly, this paper focuses on where leaders can obtain knowledge to move forward and keep their technological leadership. The findings of this paper suggest that the optimal knowledge sourcing strategy in the strategic factor market for a leader may be different from the strategy for a follower. Relying on the other leading firm’s knowledge does not provide benefits to leaders, but relying on the exploitation of their own knowledge hinders future innovative performance. In addition, knowledge sourcing from followers also shows positive impacts on leaders' innovative performance. It suggests that relying on other similar players in the same area does not provide enough benefit to leaders for future innovation. However, relatively new knowledge from followers is beneficial for leading firms. Regarding distant knowledge sourcing, outer knowledge contributes to the better innovative performance of leaders. On the other hand, regarding the capability of staying ahead, the findings of this paper show interesting results. Path dependence and outer knowledge show the same results with the innovative performance. However, in contrast to the previous model, knowledge sourcing from leading firms benefits leaders for staying ahead, but knowledge sourcing from followers does not help the leaders. It suggests leaders have to consider the proper knowledge sourcing in the strategic factor market according to their status and goals. Empirical analyses using US patents data on 3,357 firms in chemicals, pharmaceutical, and semiconductor industries over the 1981-2004 period largely support our arguments.

Cycles of regional innovative growth

Abstract For academics and policymakers invested in regional economic development, two pertinent questions are how innovative city-regions rise and whether it is inevitable that innovative city-regions will fall. Using data from 8 million patents granted to U.S.-based inventors between 1850 and 1999, this study describes a general process that city-regions undergo as innovation begins, expands, declines and (sometimes) resurges in regions. The results of the study show that inventors experiment with a small number of promising, diverse and non-local ideas in the years before innovation in their home regions begins to grow, that inventors build on early locally introduced ideas as innovation in their home regions expands, and that inventors experiment with relatively homogeneous sets of ideas shortly before innovation in their home regions declines. The results also show that declining U.S. city-regions rarely experience second waves of local innovative growth. However, when they do experience second waves, those waves are anticipated by changes in the knowledge sourcing strategies of local inventors. In particular, the years leading up to second cycles of regional innovative growth, local inventors experiment with promising, diverse and non-local ideas.

Trade-offs between external knowledge sources for firm innovation in a developing country

AbstractThis paper studies the trade-off nature of the external knowledge-sourcing strategy of firms. Different combinations of external knowledge and information sources (KISs) on innovation performance are analyzed in the light of the existence of complementary and substitution effects between relational and codified sources. We assert that these effects are conditioned by the knowledge basis of the firm, which is associated with the firm’s relative cost of sourcing and internationalization. Our results shed new evidence on the specific features of sourcing knowledge for innovation in a less developed context, highlighting the critical role of codified sources and explaining the existence of the trade-offs that firms face in accessing and exploiting external KISs.

External knowledge sourcing, knowledge management capacity and firms' innovation performance: evidence from manufacturing firms in Thailand

PurposeThis study aims to examine the effects of external knowledge sourcing breadth and depth and explore whether there exists a complementary effect of breadth (or depth) and knowledge management (KM) capacity on firms’ innovation performance. Specifically, this study investigates the direct effects of breadth, depth and KM capacity on product and process innovation outcomes and tests whether complementary effects exist between breadth and KM capacity and between depth and KM capacity.Design/methodology/approachThis study uses the survey data of 302 manufacturing firms in Thailand and uses ordinal regression analysis to test the hypotheses empirically.FindingsRegression results reveal that breadth and KM capacity are essential for enhancing firms' innovation performance, while depth is not significant. However, the authors do not find a significance of complementary effects between breadth and KM capacity and depth and KM capacity on firms’ innovation performance.Originality/valueThis study provides additional evidence to contribute to an ongoing debate on what knowledge sourcing strategies (breadth or depth) are significant for enhancing firms’ innovations. Moreover, it explores whether complementary effects between KM capacity and breadth/depth exist in determining firms' innovation performance, which is a neglected issue in the existing literature.

Sources of innovation and the use of KIBS by manufacturing firms

Using data from a survey of 559 innovative manufacturing firms in Quebec, we analyse knowledge-sourcing strategies adopted by firms and examine the relationship between use of service functions and knowledge-sourcing strategies. Four strategies are identified: low-profile sourcing, internal-oriented sourcing, market-oriented sourcing and full-scope sourcing. The results reveal knowledge-sourcing strategies are linked to a particular mix of service functions, and the different types of services are not equally important across the different knowledge-sourcing strategies.

How does external knowledge sourcing enhance product development? Evidence from drug commercialization

Like in many industries, knowledge management is the key to the successful developments of new drugs and other commercialized products in the pharmaceutical sector. Prior studies have shown that knowledge management requires effective external knowledge sourcing strategies. We argue that both the geographic distance to external knowledge sources and the diversity of such sources have strong influences on the success of the search process and the development of new drugs. We test these theoretical assumptions by applying several advanced estimation techniques on a combined broad set of data from the U.S. Patent and Trademarks Office (USPTO) and U.S. Food and Drug Administration (FDA). We find empirical evidence that the intensity of external knowledge sourcing activities has a positive effect on new drugs approval and commercialization. Specifically, our models predict that a higher number of references to prior patents increases the probability of a new patented drug to be approved and commercialized. Furthermore, the geographic distance covered in the search for external knowledge also positively contributes to drug commercialization. Important management implications derived from these findings are also discussed in the paper.

External information sourcing and lead-time advantage in product innovation

PurposeHaving a short throughput time for innovation projects, i.e. lead-time, can put firms in an advantageous position. The time that lapses between a project’s start and its completion, is influenced not only by the firm's internal capabilities but also by how the firm connects to external knowledge. This paper assesses the relation between knowledge sourcing and lead-time advantage.Design/methodology/approachThis paper empirically tests the relation between external knowledge sourcing and lead-time advantage based on firm level Community Innovation Survey (CIS) data.FindingsI find that breadth and depth of the external knowledge sourcing are positively relating to lead-time advantage, albeit with diminishing returns. Investment into absorptive capacity, i.e. internal R&D, mitigates the diminishing of returns. Firms directing their external knowledge sourcing strategy toward consumers, suppliers and science are better able to capitalize on their innovations through lead-time advantages and firms also benefit from the special case of collaboration for product development.Originality/valueThe conceptual novelty of this research largely consists in empirically bringing together for the first time conceptualizations of external knowledge sourcing and the strategic use of lead-time. Given the prevalence of both concepts in the modern and fast changing economy, investigating this link is of great importance.

Effectiveness of an ‘open innovation’ approach in renewable energy: Empirical evidence from a survey on solar and wind power

Driven by a rapid development of the so-called ‘open innovation’ paradigm, previous studies have provided broad evidence of the positive effects of external knowledge sources on innovation. Yet, little is known about the impact of external knowledge sources on innovative activities in the renewable energy sector. Based on an analysis of original survey results involving R&D organisations, we examine the role of different knowledge sourcing strategies for innovation in two technology fields, namely solar and wind power. The link between external knowledge sourcing and innovation performance is found to depend on sourcing strategies and technology fields. Our results contribute to the evaluation of strategy design by showing that solar power innovation benefits from a broad search strategy drawing on a large number of external knowledge sources, while wind power innovation tends to thrive through intensive use of a more limited number of external sources. We derive implications for innovation and energy policy.

The role of environmental innovation through the technological proximity in the implementation of the sustainable development

AbstractThis paper explores the relationship between a firm's knowledge sourcing strategy and green innovation. The data are taken from Organisation for Economic Cooperation and Development REGPAT database, February 2016, relative to the European Patent Office firms' patent applications published up to December 2015. The study contributes to the literature by focusing on the moderating role of integration between different activities related to environmental performance on the relationship between knowledge sources and green innovations. The results from 240 firms indicate a shift in the focus from internal knowledge to external knowledge when developing environmental innovations. Government policies promoting more knowledge complementarity and coordination between environmental fields will help to promote more knowledge transfer, allowing more sustainable development.

Does age matter? The impact of SMEs age on the relationship between knowledge sourcing strategy and internationalization

The use of external knowledge has received substantial attention in the literature of innovation management and open innovation as well. However, despite the interest in understanding the impact of knowledge sourcing strategy on financial and innovative performance, there is still a lack of studies assessing the impact of openness on internationalization. Drawing on the inbound open innovation perspective, we theorize that searching widely and deeply is related to internationalization performance and that firm age contributes to enhance this relationship. Based on data gathered from 135 SMEs, we found support for the positive relationship between knowledge sourcing strategy and internationalization, but not for the moderating role of firm age. These findings offer several implications to managers and scholars alike.

Changing perspectives on the internationalization of R&D and innovation by multinational enterprises: A review of the literature

Internationalization of R&D and innovation by multinational enterprises (MNEs) has undergone a gradual and comprehensive change in perspective over the past 50 years. From sporadic works in the late 1950s and in the 1960s, it became a systematically analyzed topic in the 1970s, starting with pioneering reports and “foundation texts”. Our review unfolds the theoretical and empirical evolution of the literature from dyadic interpretations of centralization versus decentralization of R&D by MNEs to more comprehensive frameworks, wherein established MNEs from advanced economies still play a pivotal role, but new players and places also emerge in the global generation and diffusion of knowledge. Hence, views of R&D internationalization increasingly rely on concepts, ideas, and methods from IB and other related disciplines such as industrial organization, international economics, and economic geography. Two main findings are highlighted. First, scholarly research pays increasing attention to the network-like characteristics of international R&D activities. Second, different streams of literature have emphasized the role of location-specific factors in R&D internationalization. The increasing emphasis on these aspects has created new research opportunities in some key areas, including inter alia: cross-border knowledge-sourcing strategies, changes in the geography of R&D and innovation, and the international fragmentation of production and R&D activities.

Green innovation and knowledge: The role of size

AbstractThis paper reports research on relationship between firm's knowledge sourcing strategy and green innovation. The data are taken from Spanish Technological Innovation Panel survey during 2007–2011. The study contributed to the literature by focusing on the moderating role of firm size on the relationship between knowledge sources and green innovations. Results from over 5,000 firms indicate a shift in the focus from internal knowledge to external knowledge when developing green innovations as firms grow in size. Despite benefits from broad knowledge search on green innovations, the relationship has an inverted U shape. The diminishing returns of knowledge breadth on green innovations are present for smaller firms and disappearing as firms get larger. Government policies promoting more coordination and knowledge complementarity between private and public sector will help to influence more knowledge transfer, ensuring a more sustainable and green economy.

The External Knowledge Utilization and Radical Innovation in Korea Electronic Industry

Purpose - This study investigates the moderation effect of internal factor, a firms size, on the external knowledge sourcing strategy and its effectiveness in generating radical innovation. We incorporate concepts of breadth and depth as two measures to gauge the degree of openness in firms external search Research design and methodology - The dependent variable in the regression model is the percentage of innovative sales and therefore, Tobit regression is employed for estimating significant factors affecting on the ratio of first-to-market by breadth and depth in external knowledge, internationalization, and size. Results - The results show that the external knowledge, in terms of both breadth and depth, has a positive relationship with radical innovation. However internationalization as external knowledge resources is not statistically accepted. Firm size has moderating effect on innovation negatively only in case of using external knowledge resources to a high degree. Conclusions - Firms obtain external information mostly from customers, competitors, and suppliers etc. empirical knowledge in terms of scope and intensity is an important contributor to innovation. And intensity use of external knowledge and information resources can work in favor of smaller firms rather than larger ones. Internationalization seems to have little effect on innovation but it requires further researches with clear criteria and more data.

SEARCHING WIDELY OR DEEPLY? THE IMPACT OF OPEN INNOVATION ON INNOVATION AND INNOVATION PERFORMANCE AMONG INDONESIAN MANUFACTURING FIRMS

Since the term Open Innovation (OI) was coined by Henry Chesbrough in 2003, OI studies have been frequently conducted. Surprisingly, OI insights, in the context of Indonesian firms, are scarce. Furthermore, there are no existing OI studies that use data derived from innovation surveys. Hence, this study attempts to close the gap in the literature, by providing insights into Indonesian firms’ openness toward external knowledge, and its impact on innovation performance. The main aim of this study is to investigate the impact of OI practices on Indonesian manufacturing firms’ propensity to innovate (i.e. their product, process, organization, and marketing) and innovation performance. Product and process innovations are grouped under the term technological innovation, while organization and marketing innovations are classified as non-technological innovation. Data used in this study were derived from the Indonesia Innovation Survey (IIS) 2011 that covered the period from 2009-2010. Following Laursen and Salter’s (2006) study, OI indicators consist of external search breadth (i.e. the number of external sources or search channels that firms rely upon in their innovative activities) and depth (the extent to which firms draw deeply from the different external sources or search channels) in innovation process. Undertaking logistic and tobit regressions, this study shows that in general, both breadth and depth significantly and positively affect technological and non-technological innovation, as well as innovation performance. However, the over-search on external knowledge, measured by breadth squared and depth squared, negatively and significantly influence innovation and innovation performance. This indicates that too much external knowledge, sourced during the innovation process will diminish the return of innovation. This study also finds an indication of a complementary relationship existing between internal R&D and external knowledge; meaning that the implementation of one knowledge-sourcing strategy (either sourcing from internal R&D or external knowledge) increases the marginal returns from another. Lastly, important implications related to theoretical and innovation strategies are proposed.

Corporate venture capital (CVC) investments and technological performance: Geographic diversity and the interplay with technology alliances

Firms are increasingly operating portfolios of geographically dispersed CVC investments for accessing a variety of location-specific knowledge, often alongside traditional external knowledge-sourcing strategies such as technology alliances. We examine the conditions under which geographic diversity in corporate venture capital (CVC) investments has positive consequences for firms' technological performance in the context of simultaneously pursued technology alliance strategies. We find that geographic diversity in CVC portfolios enhances performance as long as firms avoid knowledge redundancy in knowledge-sourcing arising from geographic overlaps with technology alliances, and the managerial complexity, coordination costs, and resource constraints stemming from the simultaneous pursuit of diversity in both technology alliances and CVC investments. Our inferences draw on a panel data set on the patents, CVC investments, and technology alliances of 55 CVC-active firms in a variety of industries.

The role of scientific and market knowledge in the inventive process: evidence from a survey of industrial inventors

This paper investigates the contribution of external-to-the-firm knowledge to the inventive process inside companies by exploiting a survey of industrial inventors combined with patent data. In the empirical analysis, inventors’ knowledge sourcing strategies are employed as explanatory factors for their inventive performance. The results suggest that both the separate and joint use of external scientific and market knowledge are positively and significantly associated with inventors’ quantity and quality of inventions. In addition, higher levels of education act as a moderating factor of the joint use of scientific and market knowledge. Tracing a positive link between external knowledge and individual inventive process is relevant for research as well as policy, considering that knowledge exchange across a wide range of organisations is at the core of the innovation policy agendas in most countries.